BBC governance needs radical overhaul, Committee report finds

11 February 2016

The Culture, Media and Sport Committee's report on the BBC Charter review says the BBC is an "extraordinary national and global institution" with a "vast amount to contribute as an international standard of excellence in public service broadcasting", but that in a fast-moving world it needs a radical overhaul of its governance arrangements.

Its Director General is "effectively accountable to no one" but also lacks the support for difficult editorial decisions or to drive change through the organisation.

BBC's accountability and transparency

Improving the BBC’s accountability and transparency will help it to continue to innovate and create superb programming, while addressing a culture that is still perceived by many as arrogant and introspective.

This was most recently illustrated by the "lobbying letter" episode: the Committee says it was completely unacceptable for the BBC to be secretly using stars to campaign "independently" on its behalf, and particularly disappointing that BBC executives refused either to investigate or disavow the episode and instead defended the BBC's actions.

Committee findings and recommendations

The BBC Trust has lost confidence and credibility and should be abolished. However, the problem that the Trust was intended to solve remains

The BBC’s Board needs to be reformed as a unitary board and strengthened, with the addition of an independent Chair

It awaits the results of the Clementi review, but in its judgement wider accountability should be the task of a separate section of Ofcom

A new complaints procedure would see all complaints handled initially by the BBC itself, with both industry and editorial issues subsequently escalated to Ofcom

The redefined BBC Board should re-examine the business case for BBC Worldwide and, if it decides to retain the wholly-owned subsidiary model, it should be subjected to greater transparency and accountability and kept under kept under review by Ofcom

There remain concerns about the BBC Studios proposals on four fronts: State Aid rules, transparency and accountability over pay, the relationship between BBC Studios and BBC Commissioners, and the BBC’s regional presence

The lack of transparency around salaries, and concerns over levels of pay for executives and talent alike, must be addressed

Charter review

In relation to the Charter review, the Committee says:

The process of Charter renewal should be separated from general elections, to avoid undue political pressures, delay and uncertainty

It does not believe there is merit in a short Charter of five years or so

If the White Paper is delayed as expected, there may well be a case for extending the present Charter for a further period

Reformed BBC Board for improved efficiency and public service

A reformed, strengthened BBC Board would:

Ensure that the BBC keeps to its public service commitments and maintains its distinctiveness between Charter reviews

Support the Director General in streamlining the organisation and cutting costs

Make it clearer where responsibilities lie, and cut down some of the confusion of purpose and bureaucracy that have undermined the existing governance arrangements for the BBC

Provide challenge to the executives from a re-invigorated and properly supported group of non-executive directors

Combined with audit by the NAO, provide a proper balance between independence from undue influence and public accountability

The Committee says any new Chair of a reformed BBC Board should be a "significant figure, ideally with acknowledged experience in managing large organisations".

New accountability body for strategy scrutiny and assessment

The new accountability body would:

Act as guardian of the public interest in the BBC

Assess the value for money of the BBC and its services

Openly scrutinise the strategy and carry out public value tests

Have a power to initiate investigations into any activity of the BBC that raises a material concern affecting the public interest

While it should have no power to mandate changes as a result of this scrutiny—this would be the clear final responsibility of the BBC’s Board—the accountability body should have the power to recommend financial and other sanctions if it were dissatisfied with the Board’s response.

Ofcom should continue to be responsible for regulation of competition, economic and spectrum issues, and any other issues facing the whole broadcasting industry.

Chair's comment

Jesse Norman MP, Chair of the Committee, said:

"We live in an increasingly divided world, and it is more important than ever to preserve an educated public realm, in which civilised debate and the exchange of ideas can flourish.

In this, the BBC has a unique role to play.But, as its own Chair and Director General recognise, it is not well served by its current governance arrangements. Based on more than six months of evidence and testimony, we believe the current structure, including the BBC Trust, needs to be abolished. In or judgement the key functions can and should be absorbed within Ofcom, the industry regulator, with suitable changes.

Within the BBC, the Director General should be made accountable to a new unitary board, with a Chair of the board able to offer guidance and support in driving change, streamlining the organisation and cutting costs. And the new board needs to address a culture within the BBC that has been widely described as bureaucratic, arrogant and introspective.

On the main challenges facing the new Charter, Jesse Norman MP said:

A key issue for the new Charter is how to balance accountability and independence. As a largely publicly funded, public service broadcaster, the BBC must offer good value for money to taxpayers, and be appropriately accountable for its spending (including on executive pay), for its editorial decisions, and for the conduct of its staff. However, it must also be protected from pressures, from the public and from politicians, which might undermine its ability to broadcast programmes that may be unwelcome to the loud, the powerful or the litigious.

But proper scrutiny and accountability cut both ways. The rushed and secretive process for the licence fee settlement last July was highly regrettable, especially echoing as it did the 2010 licence fee settlement, and the Government should take steps to make sure it cannot happen again. When the present Secretary of State was Chair of this Committee he made this argument very vigorously himself, so we hope we are pushing at an open door in this regard, and with many of our recommendations.

This is an initial report, and there remain many issues which we have not yet been able to address. We will be returning to these in further work."